Business opportunities during downturns V: Mexico: holding on and expecting to benefit from the crisis

A recent BusinessWeek report weeks ahead of President Barack Obama coming visit to Mexico shows that foreign direct investment (FDI) in Mexico is not only resisting the economic crisis and the escalation of drug violence, but showing prospects of growth for 2009-2010.

Among the reason why Mexico is getting such favorable forecasts are:

1. Lower risk than China on technology theft
2. Lower costs: the peso has dropped 41% against the dollar during the past year and the average Mexican industrial wage is 1.5 dollar per hour compared to 6 and 7 dollars in the US
3. Skills and knowledge: universities and government are offering skilled human capital and organizations accross the borrder
4. Logistics: Mexican factories are two days away from any major US city, whereas China are a month away. Factor also the rising cost of cargo, and the piracy hazards
5. Trade agreemnts with US such as NAFTA, Japan, EU and most of Latin American countrries give Mexico's exports more duty-free access to foreign markets than any other country.

Check the article and post your comments about how your PII project could seize these opportunities.

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References

• Engardio, P. & Smith, G. (2009) The Other Mexico: A Wave of Investment
  Who says it's a "failed state"? Ignoring the drug wars, multinationals are pumping in billions to set up factories . BusinessWeek
• Reuter (2009) Obama visit signals support for Mexico.

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